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Digital Bazar's Bitmunk Legal P2P Network Takes On Online Music Stores Consumers who visit any of the legal online music stores that offer à la carte downloads will find pretty much the same thing - 99-cent downloads, all the major artists from all the major labels, hundreds of thousands of songs from the better-known independent labels and some "exclusive" tracks that you won't find on any competing service. Some may have a couple thousand songs that the others don't, a couple charge a few cents less per song, but most of the content is the same. The differences are in the format of the songs - WMA, AAC - and the usage rights allowed on each track. Some, like iTunes, have the same usage rights for all songs. Others, such as BuyMusic.com, let the labels decide how many times a song can be copied and whether it can be transferred to more than one portable device, that sort of thing. Some users might be put off with songs costing the same whether they're new or old, from a hot chart-topping artist or an unknown, or only being able to download the song in WMA when their CD player doesn't support that format. These are the folks who might return to that bane of the music industry - those pesky peer-to-peer networks and the lower quality MP3 format which cannot be copy protected. A start-up called Digital Bazar, however, has designed a new system called Bitmunk that takes all the benefits of the legit online music stores - clean, legal copies of songs that pay royalties to the artist, have no viruses and don't threaten fine or imprisonment for downloading files - with the freedom of a P2P network - download what you want in the format you want from wherever you want. It also gives users a piece of the action, letting them decide the percentage they get from the sale of each file downloaded from their computer. "Bitmunk is not an online music store, rather it is a digital file marketplace," Digital Bazar co-founder, president and CEO Manu Sporny said. It lets artists list their songs and albums for sale, associate a royalty with each song and have the money deposited directly into a bank account. Fans who want to push an artist's work can resell the songs on the Bitmunk network, with the artist getting a cut, the fan getting a cut and Digital Bazar getting a cut. Sounds like utopia. Unlike a couple other systems out there, such as Weed from Shared Media Licensing and Payshare from the Swiss firm ANNO 2003, Bitmunk gives users a straight cut of the songs downloaded from their PCs rather than use a "pyramid" scheme that pays out different percentages depending on how far down from the top of the downloading pyramid the peer is. And the others attach digital rights media to their files, Bitmunk doesn't, saying that once someone buys and downloads a file, it's his to listen to on any device he wants to, wherever he is. Here's how the thing's supposed to work: - A guy wants to support his favorite band and make some pocket money at the same time by selling a few tunes over the Bitmunk network. - He visits the site and searches the database of 4.2 million registered songs. - If the song he wants is listed, he can check to see if the artist allows fans to resell it. - If the artist says it's okay, the fan can download the Bitmunk Sales Server, check to see the royalty rate the artist wants from each download, set a price for the song and wait for another fan to come along and download it from him. - If there is no notation next to a song title, chances are the artist isn't aware of Bitmunk. If the fan still wants that particular song, he can click on the "petition" button in hopes of getting the song added to the list of those he can sell. According to Sporny, once Digital Bazar has enough petitions for a song, it will go to the artist and say, "We have 50 thousand fans interested in buying or selling your song on the Bitmunk P2P network. You can determine the royalty you get for each download. Can we sign you up?" All files on the network have been approved by the artist. Although there's no DRM attached, the company does use digital watermarking to track the files to deter users from pirating tunes. Besides, anyone on the network can sell work they've created, providing international exposure for unknown musicians who don't have a record contract. Following that thread, Sporny notes that these same unknowns, if their songs sell well, can take the sales statistics, go to a label and say, "See how many people have bought my song? How about considering a contract so I can put a full album out?" The available sales data can help artists see where their music is selling best to help with tour planning and marketing. Digital Bazaar doesn't take an upfront fee from the sellers. Instead it gets 15 cents or 15% of each sale, whichever is higher. Although for starters Bitmunk will focus on music files (without restriction on the format), it will eventually open up to legal P2P swapping of DivX videos, DVD video and audio, TV shows and PDF and e-book files. Sporny says he and his team have been working on the Bitmunk technology for
two-and-a-half years. The beta version of the system is open for use by the
general public with no "risk, fees or royalties attached." The idea is
to keep the files on the beta system free for a few months as the company gets
feedback and decides what changes, if any, are necessary before going live with
the commercial system. "Making everybody comfortable with this new
distribution concept before we roll out the final service is vital," he
said. Back
to Headlines
The Cable TV, Phone and Satellite TV Wars Wall Street powerhouse Wachovia Securities worries that a price war with the satellite TV companies, coupled with a price war over broadband with the phone companies, will reduce the cable TV companies' profits and consequently their stock price. The satcos currently have about a 20% share of the pay-for-TV service market and are rapidly increasing it. The phone companies have about a 33%-35% share of the broadband market and are growing it, if only ever so slightly. Wachovia believes that offering broadband is good for the cablecos both because it's a high-margin business and because it helps them retain customers when the satellite companies beckon them. Watch These Numbers Change Cablecos Satcos Telcos Multi-channel TV 80%
20% 0% The three-way battle is an interesting one as each of the industries are either competing with the other two or threatening to. BellSouth, for example, said this week that it would start pushing TV programs to residences. DirecTV's Direcway intends to launch a satellite next year that will increase its ability to offer broadband. The cablecos are rolling out Internet telephony to their consumers whose residence is passed by their cables. Wachovia's price wars worries are: - Lessened because both DirecTV and EchoStar's The Dish have recently
announced price increases. Wachovia mentions the possibility that one or more of the regional phone companies might buy a satellite TV company in order to be able to bundle TV programming with phone services. It's unlikely that News Corp would sell DirecTV although it might welcome a partner with lots of cash. The more likely acquisition candidate is EchoStar and it's Dish service. As for the phone companies, a precedent for doing something jointly was set when SBC and BellSouth combined their faltering cell phone efforts to form the Cingular wireless service. BellSouth and SBC are using up a lot of their cash by acquiring AT&T Wireless for Cingular. However, BellSouth CEO Duane Ackerman sounded pretty desperate this week when talking to CNBC about the decision to offer TV programming to customers in the nine states where the company operates. He said that BellSouth had no choice: "In this environment, I believe if you're going to be here when the dust settles, you must adapt." Translated, it means that the pressure the cablecos are putting on the telcos in phone and broadband service is forcing the telcos to offer TV programming as part of a bundle of services. If BellSouth is feeling the pressure as Ackerman says, then the other telcos have to be worried too, because BellSouth has the highest monthly revenue per phone line and the highest operating margin of any of the so-called Baby Bells. BellSouth will now sell DirecTV in a bundle with phone and broadband services to its customers. It is more expensive and will take longer for the phone companies to add video than for the cable TV companies to add phone service. The cablecos have spent some $85 million in recent years to upgrade their networks. The telcos will have to upgrade their existing infrastructure with vDSL technology or possibly even replace it with fiber optic as Verizon has committed to doing. The telcos certainly have thought about acquiring a satellite TV company every time that they consider the cost, measured in the billions, and the time, measured in years, it will take to upgrade their networks. SBC, at the time that General Motors put DirecTV up for sale, publicly said it had considered making an offer. New services such as broadband, digital TV and video-on-demand are pumping up the cablecos' revenues and profits. Comcast, with 21 million customers, is the nation's largest cable TV company - more than twice the size of second place Time Warner Cable. Last week Comcast reported a 10.2% quarterly revenue increase and an earnings jump to a $262 million profit from the prior year's $22 million loss. Time Warner Cable reported a 10% revenue increase, mainly due to a 25% increase in broadband subscribers. Verizon's revenue increase of only 6% still led all the other regional phone companies. Most of Verizon's growth was also from new services, wireless and broadband. Verizon Wireless, which makes up 38% of the company's revenues, had a 25% revenue increase in the second quarter by adding a record 1.5 million new customers. BellSouth had only a 1% revenue increase. The company increased quarterly profits to $996 million from $951 million by cutting administrative costs by 6% - mostly because it eliminated another 538 jobs. Telcos Play Catch-up
Subscribers Q2 SBC
4.300
315,000 The cablecos have had the technology advantage of being able to deliver broadband to more residences than the telcos - and at a higher speed. The telcos' DSL has been limited by distance whereas the cablecos can deliver broadband to any home that one of its wires passes in front of. The cablecos also have a speed advantage. Time Warner Cable said last week that it would offer a 6 Mbps service for $64.95 a month or more depending on whether or not it's bundled with other services. Comcast plans to start offering a 4 Mbps service for $52.95 monthly compared to its 3 Mbps lines for $42.95 a month. Technology upgrades have recently enabled the telcos to increase their broadband coverage and speed. The telcos have been playing "catch-up" to the cablecos in broadband by offering lower prices such as Verizon' $29.95 a month for a 1.5 Mbps connection although it plans to launch a 3 Mbps line in the next few months. Assuming that the telcos get into the TV delivery business by one method or another, the next hurdle for the cable TV companies could be cell phones. The telcos have pretty much locked up the American mobile business. When Cingular completes its acquisition of AT&T Wireless later this year, the telcos will own 85% of the US market - Cingular will become larger than Verizon Wireless. The telcos, by adding cell phone service to their bundles that would already include TV, landline phones and broadband, would make it harder for the cablecos to compete. Back to Headlines
BellSouth, considered the most conservative of the four regional telcos, has recently refocused its capital spending to acknowledge the intrusion of the Internet and the cable TV companies. "We've shifted our capital spending to broadband and the Internet instead of the older switching technology, "said CFO Ronald Dykes. "It will increase and someday it will probably be 100%." BellSouth's spend on the Net and broadband increased from 25% in 2002 to 36% on this year's $3 billion capital budget. The purpose is to build infrastructure and re-wire the network to deliver video, as in TV programming, and Internet telephony. The telcos are fighting back in the broadband market. The three largest
telcos, Verizon, BellSouth and SBC, added a net of about 715,000 broadband
subscribers, about the same as the seven largest cable TV companies. Verizon's
broadband division grew 52.5% from the prior year's second quarter by adding
280,000 broadband subscribers for a total of 2.9 million. Comcast remains the
nation's largest broadband provider with six million customers. Back
to Headlines
The US cable TV companies have stung the telcos badly, first with their dominance of the new and highly lucrative broadband business - unlike anywhere else in the world. Now their Internet telephony (VoIP) is threatening the telcos' core business, the cash cow they've had to themselves for a hundred years. Their actions have now driven the telcos to partner with the cablecos' biggest enemy - the two satellite TV companies. About one in four American homes that pay for TV service now get it from one of the two major satellite services, News Corp's DirecTV or EchoStar's The Dish. The pair will add about two million new customers this year. Meanwhile, the American cablecos have lost 900,000 subscribers over the last two years, according to Kagan Research in a Wall Street Journal article. Comcast, Cox and Time Warner Cable, the three largest cable companies, lost 171,000 subscribers in the second quarter. EchoStar alone added 360,000 new subscribers in the second quarter. Comcast has reduced its projected 100,000 increase for 2004 to a break-even. The satellite TV companies have picked up some deep-pocket partners that have the look of desperation in their eyes - the four regional telcos. SBC said last week that it sold 100,000 new EchoStar subscriptions in the second quarter. Verizon has been very aggressive at selling DirecTV. BellSouth said this week that it too would sell DirecTV. The telcos need a TV package to bundle with their phone service in order to compete with the cablecos, which are now bundling phone service with their TV programs. Satellite TV's Deep-pocket Sales Partners Service Telco Resellers EchoStar SBC, Qwest, Sprint, EarthLink The satellite TV companies have had several advantages over the cable TV companies: - Better quality digital picture at the basic price. A package of 60 EchoStar channels goes for $30 a month versus over $40 a month from the cablecos for a comparable package that is in lower quality analog. - Generally acknowledged better customer service and support. The cable companies have a long history of questionable customer care, something that the satellite companies have worked to prevent. - High rate increases over a number of years. The cablecos' repeated price hikes have almost stimulated congressional action on several occasions. - DVRs. Both EchoStar and DirecTV have been very aggressive at offering digital video recorders, something that the cable companies are just now getting around to. DirecTV has become the world's largest DVR reseller and improved TiVo's financial results. The cablecos have retaliated by offering digital TV, albeit at an extra $10
or more monthly, DVRs and video-on-demand (VOD), which requires that the
customer sign up for the digital service. A limited selection of VOD is
available from the satellite TV services. The cablecos have been able to
increase their revenue while losing subscribers because they have been very
successful selling broadband and premium services like digital TV. They are also
bundling phone, broadband and TV programming, which helps them compete with the
telcos and increase their average revenue per customer. The impact on the telcos
is significant - the number of landline residential phones is expected to
decline 8% this year. It is not clear, however, how the cable TV companies will
maneuver to withstand the onslaught by the telco-satco combine on their own core
TV business. And the telcos, with an 85% share of the cellular market share,
have that trump card to play as well. Back
to Headlines
Surgery Puts Jobs Out for August Steve Jobs, age 49, sent an e-mail last Sunday from his hospital bed to Apple and Pixar employees, reportedly using Apple's Airport Express, saying that he was taking an August sabbatical to recover from a supposedly non-life-threatening cancer surgery. Apple has been on a roll of late, led by the two most successful digital media products to appear so far - unless broadband is included. iPod and iTunes have given Apple the lead in the digital media sweepstakes, outpacing larger PC and CE companies such as Sony, Dell and Microsoft. It was Jobs' persuasiveness that convinced the labels to let him implement a straightforward 99 cents a track, $9.99 a CD, online music service with a minimum of intrusive copy protection. No person runs large and complex organizations like Apple and Pixar without a number of able executives. Timothy Cook, Apple's executive VP of worldwide sales and operations, will lead the company during Jobs' absence. Jon Rubenstein, senior VP of the iPod division, chief software technology officer Avadis Tevanian, retail senior VP Ron Johnson and others will continue to help run Apple while Jobs is away. Jobs and Steve Wozniak founded Apple in 1976 at the birth of microprocessors and the PC industry. Notable achievements for Apple include: - The first PC with a graphical user interface, Lisa, was the immediate predecessor to the Macintosh. Based on concepts that Xerox had first implemented, the Macintosh inspired Microsoft to develop Windows, today's dominant PC operating system. - The first to implement the PostScript language, which led to the growth of the desktop publishing industry and products such as Quark. - The Apple LaserWriter laser printer implemented PostScript on a Canon laser printer to make high-quality printing possible for laser printers. Jobs subsequently lost control of Apple to ex-PepsiCo CEO John Sculley and
the company went into a slow downward spiral under Sculley and his successors.
Since Jobs' return to Apple, the company has rejuvenated its PC line with such
as the iMac, PowerMac and PowerBook. The online music market was still in a
tidal pool when Apple's iTunes burst on the scene. Its iPod has been the most
successful digital media player and has created what is called the iPod
phenomenon for the market demand that it has experienced. Back
to Headlines
Visitors to the Web site of DVD backup software maker 321 Studios will see the following message: "321 Studios regrets to inform you that it has ceased business operations including, but not limited to, the sale, support and promotion of our products. Despite 321 Studios' best efforts to remain in business, injunctions entered against 321 Studios by three US federal courts earlier this year has resulted in 321 Studios no longer being able to continue operating the business." The St Louis concern battled with the movie industry for most of its short life. The studios claimed that the copy protection circumvention technology built into 321's software that let consumers make backup copies of commercially released DVDs violated the Digital Millennium Copyright Act. 321 claimed that even though its DVD X Copy product might be used to make pirate copies of DVDs, its main - and only approved - use was to make a spare copy of a disc in case something happened to the original. After several long - and obviously expensive - legal fights, the company lost and was ordered to stop selling software that included the "ripper" code that let users duplicate copy-protected discs. The company then came out with "ripper-free" versions of the software, but its Web site continued to point visitors to other sites where they could get shareware and freeware rippers. Promising to fight on and appeal all the litigation against it, 321 then fired most of its staff and, blaming the money it lost on the court cases, said in June that it was considering filing for Chapter 11 bankruptcy protection. Guess it never quite made it. The Web site says that the company can no longer offer any kind of customer support for its products and asks creditors and customers waiting for rebates to contact specific e-mail addresses. Anyone still interested in 321's software - the versions not enjoined - can visit software distributor www.jambalayabrands.com for some closeout products. So, how does 321 founder and president Robert Moore feel about the situation? "We're finally starting to get the message that somebody wants us dead and they are not going to stop before we are dead," he said. The company's lawyer Michael Page told Wired News that 321 "couldn't
afford to do business and fight all the legal fights. They essentially got sued
out of existence." Back
to Headlines
DivX to Move 20m CE Devices by Christmas If anyone out there (like Faultline) thinks that there is room and enthusiasm for film download services like Movielink and CinemaNow, but ones which are properly run and which actually want to grow, they could do worse than take a long hard look at what DivX is up to. The 100 man start-up is on its third round of funding and has already passed into profit and is getting ready for a massive Christmas that could quadruple its revenues overnight. The company has been working for three years towards a scenario when CE manufacturers bundle the DivX MPEG-4 based-codecs into equipment that is sold in retail. So far it has sold two million such devices, but reckons it will sell a further 18 million by Christmas. Big jump. The fundamental difference between DivX and other codecs is that it is not trying to get video into the narrowest stream it can, but is trying to get the file size down to the smallest it can manage. DivX claims that its codec encodes video three times faster than Microsoft's VC9 codec and gives a file that has 30% better visual quality. Today it says its file sizes are seven to 10 times smaller than those on DVDs and it says that a two hour film encoded with DivX can be downloaded on a half-a-megabit broadband line in under 45 minutes, and that by using progressive downloads (download enough of the film so that the rest can download while you are watching it) users can begin viewing films in full-screen, high-quality format a few minutes after the download has begun. This week it has announced that another major portal, Libero.it in Italy, is taking its entire package, its encoding services, compression software and DRM system, to launch a 4,000-item video library to its eight million customers. Libero is part of Wind Telecomunicazioni SpA. Italy is one of the most competitive and innovative markets in video-on-demand, with streaming services launched successfully there through e.Biscom's FastWeb service. The FastWeb service was the first and is currently the largest fiber-to-the-home video-on-demand service provider in Europe with 290,000 customers. DivX spokesman Tom Huntington told us, "We've been working on this for three years. We went to the MPAA (Motion Picture Association of America) and they made it clear to us that they would not look at us until we had 10 million customers and that they were not interested in a system that involved a PC. They also helped us with our digital rights management scheme that we built ourselves. "So we've been quietly going about our business, first selling the codec to work in software, then we interested a few smaller consumer electronics firms to bundle in our codecs, then some of the integrated circuit manufacturers put it into silicon, and now the major CE firms are virtually all coming out with products between now and Christmas." That list includes Panasonic, Philips, Toshiba, JVC, Pioneer and Thomson, all of the big names except perhaps Sony. "We have chip licenses now with MediaTek, Philips, LSI Logic and ESS, all the companies that make integrated circuits for DVD players," said Huntington. The DivX vision is to see DVRs download remote content for playing, burning it into DVDs or viewing through set-tops that simply play the stored file. "We had to write our own digital rights management software which works by first registering each CE device online and uses our remote servers to store encryption keys and permissions. Once a piece of content has been given permission to play on a registered player they no longer have to be online, but the first time it is played, it needs to connect. But we make that process completely seamless for the customer," he said. The DRM system can then support multiple business models such as five-day rental or a set number of views or even outright purchase, depending on what content owners require. So does all this mean that the major studios are about ready to release content for delivery under DivX care? "It's been a long process but we think that the major studios are about to give us access." Whatever the outcome with the studios, DivX will have trouble shaking off its image of a slightly seedy start-up. Many of its early releases through its Web portal partners were adult films or anime or extreme sports, whatever content it could get in the early days, although it has amassed 17,000 pieces of content in total. For Libero though the content is mostly Italian, including TV series and indigenous films, peppered with some US films at the end of their exploitation cycle. In all DivX is encoding 4,000 pieces of content for the Libero site although it has yet to announce how it will charge for these, via subscription, pay-per-view or a hybrid. And as for the claims about shipping 20 million DivX-branded devices by Christmas, if that happens it will be a campaign almost as impressive as Apple has achieved with the iPod, and video downloading will at last be on the map. And which Hollywood studio is going to say no to releasing first run content onto a market of that size as it enters the DVD point in its exploitation cycle. This story appeared in our sister publication Faultline, published by Rethink
Research. E-mail rhett@riderresearch.com for subscription information and rates.
Back
to Headlines
The Intel Digital Media Vision: "Any Time, Anywhere and On Any Device" Intel's vision of digital media's future is summarized in a press statement announcing that CEO Craig Barrett will deliver the keynote address at next year's CES: "Intel CEO Barrett believes that more than two decades of technology
innovation - including the personal computer, the Internet, the proliferation of
digital devices that connect to PCs and the onset of wireless communications -
has set the stage for even more change in the digital home. In Intel's vision of
the digital home, consumers will be able to enjoy content such as movies, music,
games, photos, communication and information at any time, anywhere and on any
device. Barrett said that as PCs and CE devices come together and broadband
connections and rich digital media become increasingly available, new
opportunities will be created for the computing and consumer electronics
industries, content providers and consumers worldwide." Back
to Headlines
American IDC said it's launching its Broadband Internet Television system in China. Earlier this year the company launched the streaming site www.etvhollywood.tv and the download site www.ninety-nine-cent-movies.com, both of which offer classic Hollywood films in high-definition quality video. Now, it's taking its technology across the world. According to CEO Gordon Lee, American IDC will enable Chinese TV stations to
offer such value-added services as downloading content on-the-fly and nationwide
interactive live TV. "American IDC will enable the Chinese television
stations to provide the Chinese public with interactive national networks via
the Internet," Lee said. Back
to Headlines
***************************************************** Streaming Media West Conference & Exhibition Santa Clara Convention Center (800) 300-9868 [(609) 654-6266] info@streamingmedia.com www.streamingmedia.com/west ***************************************************** Alphabet Soup: DSL, ADSL, VDSL DSL has been the accepted moniker for the broadband service that the phone companies have offered in competition to the cable TV companies "cable modem" technology. Because most phone companies until recently only offered one kind of DSL, Asymmetric Digital Subscriber Line (ADSL), DSL was the generally accepted designation. The cable TV companies have increased the speed of their broadband connection and are forcing the telcos to do the same. The telcos also want higher-speed broadband to the home in order to offer TV programs and video-on-demand. The phone companies are deploying two new technologies to make higher speeds possible: Fiber optic and VDSL, which uses a combination of fiber optic and existing copper wire. Fiber optic requires a completely new network including the physical wire from the phone company's building to the home and all the associated infrastructure gear. VDSL (very high bit-rate DSL) is capable of downloads speeds as high as 52 Mbps and upload speeds upwards of 16 Mbps. ADSL has a theoretical speed of 8 Mbps to 10 Mbps, about the same as cable modem. In actuality, most ADSL is from 1.0 Mbps to 1.5 Mbps. The cable companies can squeeze higher actual speeds from their technology and the coaxial cable they use, which has made it possible for them to offer download speeds up to 6.0 Mbps - for an extra monthly fee, of course. Cable modem technology has another advantage. The distance from a central office, unlike ADSL and VDSL, does not restrict it. Because cable TV subscribers share the line, cable modem technology has the disadvantage, unlike DSL, that as new users are added and more use the same line, shared bandwidth causes a speed decline. Cablecos fix the bandwidth-sharing problem by creating a new channel to the cable and then splitting up the users into separate groups. The advantage for the phone companies of VDSL compared to fiber optics is that VDSL does not require all new wiring from the phone company to the residence. The cost of rewiring every city and village to install fiber optic is enormous and would take years. The cost of such a massive undertaking is the reason that cable TV companies still have so much debt. The Two DSLs Type Down Up Distance ADSL 8 Mbps 800 Kbps
18,000 ft VDSL, however, has an even more severe distance limitation than ADSL. It
works over copper wires for only about 4,000 feet - 1,200 meters. The workaround
for the phone companies is to lay fiber optic cable to a point in the
neighborhood where it then connects to the copper wire that runs into the home.
Called "Fiber to the Neighborhood," the method significantly reduces
the telcos' costs. Fiber to the home, "Fiber to the Curb" (FTTC) would
increase speeds even more significantly but at a much greater expense in labor.
Verizon has committed to fiber optic to the home for its customers. BellSouth
and SBC are committed to ADSL and a combination of fiber optic and copper wire.
Back
to Headlines
BellSouth Gets Serious about DirecTV Bundle Atlanta-based BellSouth has started bundling the DirecTV satellite TV service with its local, long distance and cellular phone service and broadband. BellSouth deducts $30 a month for customers who sign up for the full bundle including DirecTV, DSL broadband ($30 a month if purchased separately), unlimited local and long distance calls and, something the cable TV companies cannot match, cell phone service from Cingular. BellSouth owns 40% of Cingular with SBC owning the other 60%. BellSouth started offering DirecTV about a year ago but only this past Monday did it get aggressive about selling the service by bundling it with its other offerings. There are certain rural areas where the National Rural Telecommunications Cooperative has exclusive DirecTV distribution rights that are not covered by the deal. The move is sure to sell some more TiVos because BellSouth customers can also
purchase a TiVo-based DirecTV receiver for $99 and get DirecTV's TiVo service
for only $4.99 per month. The monthly TiVo fee is waived for subscribers to
DirecTV's Total Choice Premier package that includes most of the TV channels
that DirecTV offers. Back
to Headlines
Cox Cable, the fourth largest cableco in the US, added 97,517 broadband
customers in its second quarter, bringing its total to 2.24 million high-speed
Internet customers. Cox Enterprise, which already owned the 62% of Cox Cable
that is not publicly traded, this week offered to buy the remaining 38%. The
cable TV industry has taken on a lot of debt in recent years, investing $85
billion to upgrade its infrastructure to handle video-on-demand, Internet
telephony and digital TV. The stock market has brought down the share prices of
cable TV companies by about 30% so far this year. Cox Enterprise, owned by the
Cox family that founded what became Cox Cable, and its financial advisers
obviously disagree with the way Wall Street currently values the cablecos, at
least as far as its own is concerned. Back
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On the Future of Broadband Pricing From Faultline Issue 68, August 2, 2004 Broadband over power will be with us, certainly in the US, as a commodity, within two years, perhaps three. It is underpinned with a CPE cost of about $200, installation costs of about $150 per line and could take 3 Mbps broadband pricing to around $20 a month as perhaps the cheapest form of broadband in the US. Its advantage is that it will reach everywhere that power reaches, although it is likely to have a five-to-seven year rollout period. WiMAX and other broadband wireless technologies look like they're getting down to the same type of pricing. Its CPE will go sub $20 within two years, and shortly after the standard is set, base stations will go below $15,000 and head for $10,000 and there will be subsequent, micro base stations. The fact that it will operate in a triple (multiple) play with home telephony, mobile telephony and portable broadband (think Wi-Fi but with 20 mile circumference hotzones), means that the fixed home broadband element can be priced as low as operators want. The only costs are minimal support, backhaul and spectrum. If you happen to be an operator that's paid for your spectrum and it you already have your own backhaul. Operating costs are close to zero for WiMAX. It may hit the market at $40 a month next spring when Craig McCaw's Clearwire starts marketing, but we are looking at the prospect of broadband going so low in price that it's close to being free. We're serious about that. There is no reason why Clearwire shouldn't offer a broadband delivered TV service, or open its architecture so that others can. We know that both Verizon and SBC are currently reselling DirecTV and EchoStar satellite TV and have plans too offer their own TV services next year as their faster ADSL variants begin to hit. Power companies, telcos and wireless firms are all after this space. That's why prices are falling. In the meantime they are also spending serious money on fiber to the home which are going to start at prices as low as $34.95 a month for 5 Mbps. There is equally no reason why the power companies don't operate a triple or quadruple play of their own. With a 3 Mbps line to the home they can offer streamed TV to the home using either Microsoft VC 9 codec or the H.264 codec. They stream at roughly 1.5 Mbps and 1.25 Mbps. They could even allow a double tuner (watch one program, record another) and still leave enough bandwidth for someone to be using the Internet at 0.5 Mbps. So that's power, TV, high-speed Internet and what's wrong with putting VoIP over the line too. Using Homeplug they can save on wiring around the home (where you use your home power wiring as a distribution mechanism). The power companies, if they really go for it, could do a deal with mobile companies. We know of several deals where a cell phone is merged into a Wi-Fi phone. The cell phone companies don't have to bother putting in much of a network in a suburban area, because you use the phone at home through Wi-Fi to your broadband line. A soon as you go out it cuts over to being a mobile. The same is true for WiMAX networks, which could add TV services, and of course for the incumbent telcos. Once a giant like Verizon starts to move it can tear up the rulebook and give away broadband lines. Already with VoiceWing VoIP launched last week, Verizon took services that used to cost around $125 a month - local phones calls, long distance calling, discounted international calls, broadband internet and a $39 subscription to DirecTV, and brought the bundle to under $100. Effectively by using VoIP aggressively, it tore up the cost of high-speed Internet lines. So broadband at the low end could end up bundled in for next to nothing in
order to get the rest of a triple or quadruple bundle. DSL Extreme Offers 6 Mbps Broadband DSL Extreme, a tiny but growing broadband ISP, is offering residents in
greater Los Angeles, San Diego, San Francisco and Sacramento a special
high-speed DSL Internet service package for $59.95 as part of a special
three-month promotion. The package includes always-on download speeds up to 6
Mbps, upload speeds up to 0.608 Mbps. A special "Price Freeze"
guarantee locks in the promotion price for as long as service is continued with
DSL Extreme. Other features include 10 e-mail accounts with a total of 1 gig of
storage, 250 Mbps for personal Web space, game server access with gamer-specific
peering and unlimited Usenet news service. Back
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Cable TV Will Continue Broadband Dominance The cable TV companies will continue to dominate the broadband market, at least through 2008, according to the Yankee Group's "Broadband Subscriber Forecast." With help from the telcos' DSL, the company predicts, there will be more broadband subscribers than dial-up users by mid-to-late 2006. Generally, more than 95% of cable modem users are residential consumers; an estimated 15% to 20% of DSL customers are small businesses. Consumer v. Business Broadband Consumers Businesses Cable modem 95%
5% The Yankee Group bases its predictions on the ability for both broadband and
content service providers to generate additional services over the network that
will drive consumer use, such as voice, games, photos and video. Yankee Group
consumer technologies and services analyst Patrick Mahoney forecasts that by
year-end 2008, there will be more than 52 million broadband households. He said
that low DSL prices, increased speeds and increased availability caused the
company to increase its 2004 forecast. Back
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Broadband Threatens Current TV Delivery Models Broadband-transmitted video is becoming a real threat to the pay TV services that the cable and satellite TV companies offer, says ABI Research's "The Rise of Broadband Video," which examines the technologies involved and presents market forecasts broken down by technology and by region. Broadband-delivered video will redraw the map of supply and demand for the delivery of visual content, the company predicts. Several factors drive this change, according to ABI Research's Vamsi Sistla: - Film studios and record labels are losing their fear of digital distribution, partly due to the commercial success of music download services such as Apple's iTunes. - The telcos have realized that there are great opportunities for additional revenue if they offer their customers video over copper wire and fiber in the future. All of this depends, of course, on broadband penetration. At the end of 2003 there were over 85 million broadband subscribers worldwide, of whom 53 million were DSL subscribers, prime candidates for video-on-demand over broadband. Consumers are seeing a proliferation of digital devices in stores: TV tuner cards for PCs, digital media adapters to connect TVs and stereos to the PC and digital media servers. Netflix has already taken a small bite out of movie rental giant Blockbuster's revenue. ABI says that broadband video is the next thing to watch out for. The researcher says that it's "right around the corner" and "could pose a bigger threat to the prevailing video distribution landscape." This won't happen everywhere at once; regions with successful cable and satellite TV industries will take longer. But in markets with lower cable/satellite penetration, it's happening now, with a number of countries already rolling out DSL TV services. "Obviously there are initial shortcomings compared to cable or
DBS," said Sistla. "They won't be able to offer high-definition
quality content, for example - the data rate isn't high enough, and the
compression isn't at that level. But in future, xDSL and fiber or some
combination of both could be a very viable candidate to offer a high-definition
stream just like cable or satellite." Back
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BT Cuts Broadband Prices, Adds Grading BT has reduced the prices for its various broadband offerings, following a trend the DSL providers in the states implemented in their fight against the cable broadband outfits: - BT Broadband (512 Kbps) - down from £27 per month to £24.99. - BT Yahoo Broadband 512 Kbps - down from £29.99 per month to £26.99. - BT Yahoo Broadband 1 Mbps - down from £40.99 per month to £29.99. - BT Broadband Basic (512 Kbps) - remains at £19.99 per month, but now comes with a free modem and connection. All products will continue to offer free connection and modem when purchased online. BT has also implemented a "grading" method, otherwise known as a usage allowance, whereby heavy users will pay more than light users. The company said, "Until now, lighter users of broadband have been paying the same price as a small minority of exceptionally high users." To resolve this, BT will introduce "fair usage" allowances, which will permit lower prices for average users. It says that it's setting the usage allowances at levels significantly higher than the usage of the overwhelming majority of broadband customers. With the exception of BT Broadband Basic, the limits will only be advisory until Jan 2005. The 512 Kbps services, featuring a 15GB allowance, will still let customers to do all of the following each month: - Surf the Internet for 15 hours every day - Send/receive 250 JPEG pictures via e-mail per week - Download 250 music tracks and three hours of video clips per week - Listen to online radio for 15 hours every day - Send/receive 3,000 e-mails per week. BT boasts that all its products offer full broadband (512 Kbps and above). It says that at £39 a year, its 1 Mbps connection is cheaper than the cable company NTL. The company also says it remains committed to making broadband available to 99.6% of the UK by August 2005. BT currently has over one million retail broadband customers. Back
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Comcast Broadband Adds Video E-Mail Comcast and other broadband providers are adding new services and content to gain a competitive edge. Comcast's new Video Mail lets its broadband subscribers create video e-mail up to 45 seconds in length, using a Web cam. It can be used to send personalized video greeting cards and to share digital photos as a narrated slideshow. Comcast Video Mail messages are sent as a Web link and are streamed from a
secure server, where they can be saved for up to 30 days. A sample is available
at: http://videomail.comcast.net:8080/vm/jsp/vm_player.jsp?vmfile=/vmdata/67/60/VEM.PR5@comcast.net_1089899267635.wmv&vmpid=1004.
Comcast offers a 3 Mbps and a 4 Mbps download connection. Back
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Powerline proponents - those who are convinced that the electricity wires will be the best way to connect the home to the Internet and to network the homes' PCs and digital media devices - are adamant that their way is a viable third way. They are convinced, despite the jump that Wi-Fi, DSL and cable modem products have, that they bring a viable alternative. Coax proponents argue that the existing coax cable in the home is the only one capable of the speeds and copy protection needed for multiple streams of high definition video. Satellite proponents such as Direcway say that in the future they will be able to deliver the speeds needed for delivering content to the home. Powerline touters say that network products based on the HomePlug standard will be at least a part of complete in-home solution. Like the coax backers, they acknowledge that Wi-Fi will be used for things that need whole-house coverage such as on a porch or patio. Wi-Fi, or some wireless equivalent, will be used for small, battery-operated items that need live updates - a laptop being used for connecting to the Internet, for example. A summary of where the Powerline bunch stands at this point: - The HomePlug Powerline Alliance put together the HomePlug 1.0 specification for in-home networking, which is the only globally recognized standard for high-speed powerline networking. - HomePlug 1.0 networking products are shipping throughout North America, Europe and Asia. Hundreds of thousands of products are already in use. The products offer a convenient way to share broadband Internet services. Home networks based on HomePlug technology, they say, are far easier to install than the dedicated network cable needed for purely Ethernet-based networks, or for the optimum placement of wireless access points. - The next-generation of the in-home specification, called HomePlug AV is being developed from the ground up to support entertainment applications, such as HDTV and home theatre. HomePlug AV will provide a convenient and cost effective method of distributing HDTV in the home without new wires. The consumer electronics companies and service providers who are members of the Alliance are driving the development of HomePlug AV. - This year, the Alliance has started a process to define technology standards for Broadband Powerline (BPL) networks, which will allow utility companies and service providers to deliver Internet access to homes and businesses through the existing outdoor power lines. The Three Standards for Transmitting Data Over Electrical Wires Standard Status Description HomePlug
1.0
Completed standard for the networking products that connect to
the home's AC wiring. Broadband Powerline Specifications
standard for using the utility companies' elec- The Third Way High-speed Internet Connections In-home Networking The telcos' DSL
Wired network cable Satellite
Existing coax cable Back
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Synacor Adds Knology to Customer Roster Synacor, which sells bundles of premium content to broadband ISPs, has a new distribution partner in West Point, Georgia-based Knology. Knology will offer two tiers of Synacor's entertainment, sports, family and educational content, My Broadband and My Broadband+, to its broadband subscribers. It will use Synacor's Portelus platform to supply the content as well as the authentication, provisioning and unified login - all the content in the bundle is accessed through a single login. The packages range from $9.95-$19.95 a month and include NASCAR.com's TrackPass with PitCommand, MusicNow Radio, MusicNow Full Access with downloadable music, Clever Island, Encyclopedia Britannica, American Greeting.com, Shockwave.com GameBlast and anti-virus and parental controls from Zero-Knowledge Systems. If bought separately, the content subscriptions would cost $45-$60 a month. EarthLink, RCN and Susquehanna already provide premium content bundles to
their broadband subscribers using the Synacor platform. Back
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Comcast Broadband Adds Fantasy Football with "Trash-talking" Comcast continues adding content and services for its broadband subscribers
in order to differentiate its offering from that of the phone companies.
Comcast, largest broadband provider in the US with six million customers, has
teamed with Electronic Arts and become the exclusive distributor of EA Sports
Fantasy Football for the 2004-2005 NFL season. It's available to all Comcast
broadband customers. Comcast's new Video Mail service will let fantasy football
players to send video messages to each other and facilitate
"trash-talking" - boasting and bragging, one-upmanship and teasing
other players. Back
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What's Wrong with this Picture? The bulk of South Korean households will be connected to the Internet at a speed of 100 Mbps by 2010 according to Chin Daeje, the country's minister of information and communications. Like Europe and most of the rest of the world, the once-monopoly phone company provides most South Korean broadband. Yet, while European and North American phone companies are struggling to deliver 1 Mbps downloads, South Korea is already implementing 100 Mbps. The higher speed is needed to deliver multiple channels of high-definition video to the home - things such as movies, TV shows and other video content that will be developed for the Internet market. Broadband Speeds
Speed Europe, Canada,
US, Americas 1
Potential (millions) (millions) (US date format) Adelphia
0.951 324,236 - year
12/31/03 -------------------------------------------------------------------------------------------------------------------------------------------------------------------------------- Broadband Scorecard International
Potential Belgacom (Belgium)
0.785 51.8% - year
12/31/03 Wanadoo - UK only 0.192 34,000 - qtr 03/31/04 Yahoo BB (Japan) 4.706 73,000 - qtr 03/31/04 "Potential" is the number of homes that could potentially
subscribe. In other words, how many homes their cable passes. 3 Launches Mobile Video Service UK mobile operator 3 has hooked up with major label BMG to launch the country's first mobile video jukebox. The new service lets 3 subscribers stream music videos directly to their video mobile phones from the company's "Today on 3" live mobile news and entertainment channel. The video service launched this week with a range of full-length music videos from top BMG artists including Christina Aguilera, Dido, OutKast, Britney Spears and Justin Timberlake. Users will have access to new video releases four-six weeks before the single launches. 3 plans to offer more than 40 videos to choose from, with up to five new releases added every week. Videos cost 1.50 pounds ($2.75) each and can either be streamed via QuickPlay
or downloaded to the handset for unlimited play. The company also offers an
Unlimited Entertainment Add-On for 10 pounds ($18.25) a month that gets users
unlimited access to 3's music and entertainment service. Back
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Mobile Ticketing Will Boost M-commerce Mobile ticketing applications - the ones that let consumers buy movie, theater, train and bus tickets - are on track to become a $39 billion industry by 2009, according to Juniper Research. Digital content such as music, games and ringtones will continue to dominate mobile commerce, accounting for $48 billion in 2009, but over the next couple of years mobile ticketing will emerge as a major application. Juniper found that mobile users, especially in Europe and Japan, are showing interest in buying tickets over their cell phones. RFID and infrared technologies will likely have a major influence on the future development of mobile payment techniques. Juniper also believes that developing global standards will be a slog "due to too many industry bodies concentrating on vested interests." Overall, the researcher expects the global mobile commerce market to reach
$88 billion in 2009. Back
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T-Mobile Austria Banishes Boring Dialing Tones T-Mobile Austria has joined its sister companies in Britain, Germany and the Czech Republic in offering a service to replace boring dial tones - the thing a caller hears until you pick up your phone. Dubbed SoundLogo, the service offers T-Mobile customers more than 1,000 music tracks to choose from ranging from current and classic hits to jazz, classical and folk. SoundLogo is available to any T-Mobile Austria customer - both contract and prepaid - with any model mobile phone. When calling a T-Mobile phone, the caller will hear the selected music track
with a distant dialing tone. The music will stop as soon as the T-Mobile
customer answers the call. Back
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SmartServ Unveils Uphonia Prepaid Mobile Service with Free Content Mobile content and technology provider SmartServ Online, which fancies itself a mobile virtual network operator (MVNO), has unveiled Uphonia, a new pay-as-you-go cell phone service that's bundled with thousands of free ringtones, images and graphics. Consumers can access the content online at Uphonia.com, in retail stores at Uphonia touchscreen kiosks or download directly from their Uphonia phone. Phone services include nationwide coverage, free long distance, nights and weekends, voice mail and caller ID. SmartServ also plans to bundle low-cost international calling rates - it's acquiring PKCCD, a New York City-based international prepaid calling card distributor. At launch, Uphonia is offering customers some 5,000 free downloadable
ringtones, images and graphics. Back
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Virgin Mobile Takes a Bite out of Boredom Virgin Mobile in the UK has launched a new service, dubbed Virgin Mobile BITES, that offers what it calls "bite-sized boredom busters" - cheeky, irreverent bits of gossip, games and entertainment for mobile users to check out when they're bored. Described as a cross between a celebrity gossip rag and an infotainment service, BITES delivers exclusive, original time wasters designed with Virgin's "young, fun-loving" customers in mind. BITES keeps users occupied with little quizzes, polls and reviews. It also lets them publish their own material and rewards their participation with prizes. Specific content categories include salacious celebrity gossip, questionable quizzes such as "man or woman" and "celebrity or wannabe" and the ability to confess your sins to win prizes. Users can take flirty interactive quizzes that give them the chance to see a great looking girl or guy in various stages of undress or access strange-but-true facts. For the slightly more serious in nature, there's music news and gossip, club listings, recommendations and reviews; general news and a humorous take on sports news and results. In conjunction with the mobile service, the company is launching a monthly Virgin Mobile BITES entertainment magazine that will be sent to registered Virgin Mobile subscribers. It'll also be available in Virgin Mobile retail locations. The magazine is free. The mobile service is free until the end of January.
Back
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Mobile Streams Expands, Partners & Gets into Gambling UK-based mobile services and content provider Mobile Streams, which aspires to become a truly global company, recently set up subsidiaries in Argentina, Brazil, Chile and Mexico. The company, which also does business in the US, believes that a Latin American presence will make it easier to establish contracts with local network operators and music publishers. Back on its home turf Mobile Streams has partnered with mobile operator O2 in a deal that makes it a main ringtone and background supplier for O2's Revolution service. A wholesale distribution channel for mobile applications, Revolution forges strategic relationships with mobile application developers. It also offers content direct to consumers through O2's Active portal. The company also launched a new fully licensed mobile gaming and gambling service dubbed Go Vegas Go that includes poker, roulette, blackjack and several kinds of slot-machine games. Virtue Fusion supplies the gambling platform and games that work on various Java-based mobile phones. Limited to the 18-and-up crowd, the games can be downloaded to a phone after the user sends the service an SMS message. Mobile Streams plans to make Go Vegas Go available to its partners on a
white-label basis that will let them launch a gambling service without having to
develop the infrastructure or acquire a gaming license. Back
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Zingy Offers Content from 50 Cent Rapper 50 Cent has hooked up with mobile media firm Zingy, making it the exclusive distributor of ringtones, ringback tones, voicemail greetings and images featuring original voice recordings from the notorious hip-hop artist. The content will eventually be available to mobile users around the world.
Initially it's available through Zingy.com and its distribution partners AOL,
Boost Mobile, MTV, Nextel, Sprint PCS and T-Mobile, with other providers added
throughout the year. Back
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Primedia Goes Mobile with Mforma Targeted media firm Primedia, which owns such Web sites as About.com and IntelliChoice.com, has teamed up with mobile entertainment publisher Mforma to mobilize content from both sites. The deal gives mobile users access to content from About.com, a leading source of original consumer advice and information, and IntelliChoice.com, which provides automotive information to US consumers. Now, when shopping for a new car, folks can click to IntelliChoice on their cell phone to get info about the dealership, compare prices and find the best deals. The IntelliChoice and About.com mobile offerings include: - IntelliChoice Mobile. Compare, research, configure and price automobiles while accessing buying alternatives, quotes and best deals. - About Food. Learn the science behind cooking and baking, find step-by-step directions for working with various ingredients and appliances, get info on healthy eating, low-carb or low-fat diets, quick meals and recipes. - About Health. News and info on leading health issues such as allergies, alternative medicine, exercise, stress, weight loss and women's health. - About Movies. Provides news on the latest films and Hollywood stars and movie and show time searches. - About Shopping. Find helpful shopping tips, search for bargains by category and check out reviews. - About Soaps. See up-to-date news, spoilers and info on the most popular daytime dramas. - About Style. Browse articles on current fashion and design trends, interior design, beauty fashion, jewelry or style for men. - About Travel. Get advice for planning trips; search by region or category, such as budget or business travel. - About Games. View news, reviews and top 10 lists for the hottest wireless and console games. - About Autos. Read current headlines from the automotive industry, detailed listings and reviews. Mforma's mobile platform pulls the content from the Primedia sites and
tailors it to fit the screens of most wireless devices. The content is initially
available to Verizon Wireless customers with Mobile Web 2.0-capable phones via
the "News & Info" section on the Mobile Web home screen.
Back
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Take My Cell Out to the Ballgame Wireless subscribers with advanced Nokia phones can now listen to real-time
scores, stats and live audio broadcasts of Major League Baseball games thanks to
a pact the mobile phone giant made with MLB Advanced Media, the interactive
media arm of MLB. The deal lets users choose whether to hear the home or away
team's broadcast of the game. It also provides daily video highlight packages,
game images, league news and current standings. The Nokia Sports application,
which includes the baseball content, can be downloaded for a free trial. Once
the trial ends, the monthly fee is $7.99. For now, the app will only work with
the Nokia 6600 and Nokia 6620 handsets. Back
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TiVo Adds DVD Recording to Its Design TiVo, which does not make digital video recorders (DVRs), just designs and licenses them, has introduced a reference design for a "second generation" DVR that will include implementation of a built-in DVD recorder. Most current models of TiVos can only record the content that a user has stored on TiVo's hard disk to an external DVD or VCR. Such recording loses some of the picture clarity even if originally recorded from a high-quality source such as a DirecTV digital transmission. TiVo has made a deal with Pioneer Electronics, one of its OEM customers, under which it will recommend to its other OEMs that they get the DVD design and components from Pioneer. TiVo also recommends that they only permit DVDs to be burned in DVD-R or DVD-RW formats, not in the competing DVD+R and DVD+RW format despite the fact that Pioneers supports all of them. Pioneer already sells a TiVo-based DVR with a built-in DVD recorder of its
own design. Toshiba and Humax are expected to build TiVos with built-in DVD
recorders as well. However, DirecTV, TiVo's biggest customer, has not said what
it intends to do. Thompson and Philips make DirecTV-enabled TiVos. DirecTV
recently sold all its TiVo shares, leading to speculation that it intends to buy
non-TiVo-based DVRs, which it recently said it would do. There may also be some
sensitivity to DirecTV's content protection. Its version of the TiVo, although
it has the necessary hardware, is hobbled to prevent the unit from being
connected to a PC network. Such a connection would make it possible to make
unlimited copies of TiVo-stored content and make it available for others to copy
on a P2P network. Back
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Apple and Motorola's Music-phone Deal Full of Both Promise and Unanswered Questions Apple and Motorola left a lot unsaid as they jointly announced that they will work together on an iPod-style player for Motorola music phones, due next year. The two referred to the player as a new iTunes mobile music player, and the fact that Apple chose Motorola to work with comes as no surprise to anyone that has studied the two companies over the past decade. Apple's architecture has been reliant on Motorola chips for some time, including the PowerPC chips that drive the current generation of Apple Macs. Although they come from an IBM chip design, originally in the early 1990s, Apple gave them their first design win and Motorola was a second source and helped in the design. This new music capability will be included in all of Motorola's mass market music phones, the two companies said, though they did not say what proportion of Motorola handsets that was. But speaking at an analyst event last week Ed Zander, freshly installed CEO of Motorola, showed off the devices and previewed a number of new devices that will be capable of carrying the service due out later this year and early next. The first question the deal raises is just how much memory on the phones will be allocated to keeping Apple music onboard? The iPods go from 4GB to 40GB, keeping between 1,000 songs and 10,000. A phone is more likely to offer maybe half a gig, so perhaps will only hold 100 to 125 songs. Well that one was actually answered at an analyst event by Motorola, pointing out that the current phones only had 128KB now, but that they would all be launched with either half a gigabyte or one gig and that this would give a capacity of 170 tracks or about nine hours of playback time. Another option is for these phones to be among the earliest to use a one-inch disk drive inside the mobile, which would open the way for far more storage and perhaps images and video as well as music. But no mention was made of this at the analyst event. And as Motorola itself represents only 16.5% of global handsets, why would Apple want to limit itself to only doing a deal with Motorola. Steve Jobs attended the event by videoconference and said that Zander and he were friends and that as soon as Zander landed the job at Motorola, he called him up and said, "I'm sure there's something we can do together." Jobs also let slip that iPods had just passed the four-million mark in sales. Could it be that the two will work together on the device and then license the know-how to Nokia (31% market share), Siemens, Sony Ericsson and others, to create a real shut out on the mobile phone in the future, or will it stay Motorola only? Perhaps this simply the first of many phone deals announced by Apple? Our guess would be that this is a single opportunistic deal right now and Jobs will watch how well it goes and move on from there. Will Motorola put the new interface on a Microsoft Pocket PC phone edition or any of the other Microsoft Windows Mobile operating environments? In which case the irony of Apple giving Microsoft a leg up in phone markets will not be lost on the Apple CEO Steve Jobs, a seasoned veteran of wars with Microsoft. Well that one was partially answered too, with demonstrations of music capable phones by Motorola that were indeed based on one or other variant of the Microsoft platform, bundled with lots of enterprise goodies like e-mail, calendaring, PowerPoint and Word, which at the same time had a camera and removable flash storage. But it clearly isn't only on Windows phones, so it cannot be a straightforward implementation. It seems this iTunes version will run on all Motorola music phones. The link to iTunes will be made through a USB or Bluetooth link, and this access may well compromise the protection that is afforded by existing phone digital rights management software, currently unified around OMA 2.0 and just being rolled out. How that is going to be managed was not a question anyone was prepared to go into. Operators are not going to be happy with a phone that doesn't use OMA 2.0, because it will undermine the burgeoning DRM standard, so is Apple perhaps creating a gateway between its Fairplay DRM and OMA? Another unanswered question. This looks like a service that is going to be on every Motorola phone capable of music. If Apple wanted to create such a link, one of the most sensible ways to go about it would be to work with the codec and player supplier that leads the way on putting content on the mobile phone - RealNetworks. RealNetworks recently launched a link between its own DRM and Fairplay, which was created without Apple's knowledge or help. After a few days of thinking about it Apple came out with a statement that said that it was stunned by the RealNetworks tactics and ethics and described the move as a "hack." Since it is now illegal under the Digital Millennium Copyright Act to bypass copy protection, for whatever reason, RealNetworks will almost certainly end up in court with Apple. But that's just the weakness of the DMCA idea of making bypassing illegal. If it had just stuck to making copyright breach illegal that would have been fine. Now a move that RealNetworks parallels to creating "plug compatible" PCs from the original IBM design, has become technically illegal. Apple also said, "We strongly caution Real and their customers that when we update our iPod software from time to time it is highly likely that Real's Harmony technology will cease to work with current and future iPods." The RealNetworks answer was "Consumers, and not Apple, should be the ones choosing what music goes on their iPod," a statement we have some sympathy with, but a DRM should not be forced to cooperate with another DRM, that just tells consumers that it is breakable. So a perfect opportunity for Apple to get onto an established OMA DRM has passed by. There are two other routes though. Apple could make Fairplay, or a version of it, compatible with the OMA 2.0 standard, or it would work with (or acquire) one of the smaller OMA 2.0 compliant DRM software makers (of which there are plenty). Which has it done? No answer yet. Sony is another company that has all the elements of this deal in its own hands. It has the Sony Connect online music service, the Sonic Stage jukebox, its MagicGate DRM and Sony Ericsson phones. Expect a competitive announcement to follow very soon. Apple has wasted an opportunity to become friends with RealNetworks, which has huge influence on the mobile phone industry. But another question is, what operator in its right mind is going to allow music to move on and off a phone, which it sells, from a PC? The operator has no chance of making a margin on the music or on the download connection time. The operators are now trying to exert more and more control over handsets, and Nokia has suffered a lack of deals from companies like Vodafone simply because it dictates function to the operator. And yet the idea of an iPod style interface on a phone is superbly compelling and perhaps Motorola and Apple can come up with a business model, like fitting an iTunes music store to a mobile operator service, that will recompense the operators for letting the music in from the PC. Some music could come from the PC, other music direct over the airways. But it's not a question that was answered. We know the consumer will like it, but that doesn't make the operator richer. Perhaps it is simpler than we realize and the consumer just might create enough pressure to have an iPhone, and force operators to "allow them" on their networks. In the official release Steve Jobs said "The mobile phone market, with 1.5 billion subscribers expected worldwide by the end of 2004, is a phenomenal opportunity to get iTunes in the hands of even more music lovers around the world and we think Motorola is the ideal partner to kick this off." But that approach is a little too anarchistic for operators perhaps. If Motorola is just going to kick it off, it sounds like Jobs is creating a free for all, whereby every other phone maker will come knocking at his door between now and the launch of the first iPhone (shall we call them that?) Apple currently claims to have 70% of the online music market and a 50% market share at the top end of the portable music player device market. But at a mere four million devices, this is but a drop in the ocean compared to the 1.5 billion phones that are out there now and the two billion mobile phones that will be in circulation by 2008. Motorola also previewed more phones and innovations at the analyst event, some of which are relevant to digital media. It showed its Dynamic Portal that works with any protocol phone, whether it is CDMA, Edge or 3G to give access to live TV, sports items and breaking news, which it is putting in most of the phones it announced. It showed its first combined VoIP phone cell phone that connects to Wi-Fi either at work or at home and then seamlessly drops into cellular, complete with handoff, when the speaker moves out of range of the Wi-Fi. This will help a push into enterprise and will be out at the end of 2004, and given that Motorola was one of the companies that helped British Telecom produce its "Bluephone," service which does exactly the same, it looks like the work was pioneered in that deal. Also on show was the Ojo videophone, designed and built by WorldGate Communi-cations that works with any broadband line, which Motorola took exclusive distribution rights to in May. Earlier this month it placed its first $5 million order for the product. Zander rigged up a videophone call to Wimbledon tennis champion Maria Sharapova and yes you could recognize her on it. WorldGate bills the Ojo as the first consumer videophone that provides jitter free video and synchronized audio and video. Zander finished off the show with a preview of the RAZR V3 slim phone, which he called the Razor, and which he said did everything except help you shave. The V3 is an ultra-slim, metal-clad flip phone made from a combination of metals, including "aircraft-grade" aluminum, an internal antenna and a chemically-etched keypad, with a 2.2-inch diagonal screen, due in the fall. It has a big "I want one," cool factor, and add iTunes to it and it may well become irresistible. Something tells us that however well that particular phone does this year is how well Motorola will do in the era with Zander at the helm. This story appeared in our sister publication Faultline, published by Rethink
Research. E-mail rhett@riderresearch.com for subscription information and rates.
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The FCC's latest decision is sure to blow a few bolts in Hollywood. This week the Commission certified TiVo's technology for protecting recording of digital broadcast television. The FCC determined that digital broadcast television content should be protected, but that protection should still enable it to be accessed over the Internet - so long as that access does not lead to mass indiscriminate redistribution of programs over the Internet. The FCC voted to certify digital protections on the company's TiVoToGo, which is not yet available, but will permit a user to record and send - via the Internet - a digital television show that has been broadcast over-the-air to up to nine other registered people who have a key allowing them to see it. The process is nowhere as easy as forwarding a music track or photo to another person. Last November the FCC voted to require manufacturers to support the so-called "broadcast flag" by July 1, 2005. Its purpose was to stop digital-quality copies of recorded content from being made available on the Internet, such as on the P2P networks, via e-mail, copied with ICQ or sent in an instant message. The FCC did not detail any specific technique or technology, leaving it to manufacturers to propose their own. The FCC decision included approval of 12 other proposed new technologies for copying programs from such as Microsoft, Sony and RealNetworks. The consumer who would benefit from the FCC decision is one who uses a roof-top antenna to get digital broadcasts from the local TV station and who has a broadband connection fast enough to transmit or e-mail the recording to others who also have broadband - not a likely combination. The certification applies only to over-the-air transmissions from local TV channels, not digital content from a cable or satellite TV transmission. As such, only a small number of users will benefit - those who have a roof antenna capable of receiving digital TV broadcasts. Digital broadcast programming would come through digital-to-digital, but users could only share the over-the-air broadcasts for free, not copy protected content such as movies. The certification will permit TiVo to implement technologies for accessing recorded content over a PC network or via the Internet for that very limited market. The decision is more of a loss for the studios than it is a win for TiVo. Most TV shows and televised movies that are broadcast over-the-air or delivered via conventional cable TV are in analog rather than digital format. Recording them results in some loss of quality. Subsequent copies lose more quality. What the studios and other video content owners fear most is that digital video permits people to make perfect copies. As the MPAA's Jack Valenti has warned many times, a copy of a digital movie is a perfect copy, whether it's the first one made or the thousandth - whether it's copied from a TiVo to a PC or from a PC in the US over the Internet to one in Europe via a P2P network. Shows and movies shown on digital TV do not suffer from the loss of quality when recorded and copied. That is what leads the movie and TV industry to their concerns about unfettered mass redistribution on the Internet - the so-called Napsterization of the TV and movie business. TiVo plans to launch TiVoToGo this fall. It will permit users to copy content recorded on a TiVo from the TiVo to a PC. It has said nothing about introducing a model that would permit shows to be sent to someone outside the home. The FCC decision does not restrict where the recorded shows could be sent. The disappointed MPAA said, "Technologies that enable redistribution of copyrighted TV programming beyond the local TV market disrupt local advertiser-supported broadcasting and harm TV syndication markets." An example of market restriction is that DirecTV and EchoStar subscribers are restricted from viewing local station programming in any market except the ones the TV networks have approved. For example, a satellite TV viewer in Baton Rouge can't watch TV programs from New Orleans stations even though those stations can be picked up with a roof antenna. The networks may own the stations and the content that they show, or be licensed to show it, but it is the public that owns the airways that the stations use to broadcast over. The market restriction policy contradicts itself because DirecTV subscribers can watch NFL broadcasts from every other geographical market for an annual fee. The movie studios and the NFL strongly opposed the FCC's move. The NFL's concern was not so much about copying recorded TV movies, although there is a small market for previously played games. Rather its concern that a person in one city could somehow record and simultaneously rebroadcast a game from one city to another city whose football fans were being forced to watch the home team play a less exciting game. The quote of the week award goes to Jim Burger, a lawyer for TiVo, who complained about the NFL's objection, "Maybe their engineers understand how to inflate a football, but I don't think they understand encoded, encrypted MPEG-2," the copy protection scheme that TiVo uses. TiVo CEO Mike Ramsay said that the company tried to maintain a balance between consumer interests and the rights of content providers. A less encumbered TiVo, accessible freely over a home's PC network, could become the iPod of home media servers. It would store and serve up recorded movies and TV programs, downloaded music and videos plus home made videos and digital pictures to devices throughout the house. TiVo has about 1.6 million subscribers who pay a monthly subscription rate or a one-time flat fee for lifetime usage. The TiVo service permits users to record television shows and movies shown on TV and then watch them whenever they choose. TiVo does not make any hardware. It focuses on developing and patenting the technology for digital video recorders and licensing its technology to hardware makers. It also makes money from the TiVo program guide service. Note: A TiVo spokesperson says that current DirecTV TiVo boxes do have the
capability for a broadband connection, but DirecTV, for some unexplained reason,
has not enabled that part of their TiVo service. Users of the devices have to
run a phone line to the unit so it can get updates via - oh my gosh - a dial-up
modem. "Hey DirecTV, get with it because it's 2004. Even MSN is calling
dial-up like a buggy whip." Back
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The 13 FCC Approved DRM Technologies - Sony - MagicGate Type-R for Secure Video Recording for Hi-MD Hardware - Sony - MagicGate Type-R for Secure Video Recording for Memory Stick PRO Software - Sony - MagicGate Type-R for Secure Video Recording for Hi-MD Software - Sony - MagicGate Type-R for Secure Video Recording for Memory Stick PRO Hardware - Thomson and others - SmartRight - Philips Electronics NA and HP - Vidi Recordable DVD Protection System - Digital Content Protection, LLC - High Bandwidth Digital Content Protection - 4C Entity, LLC - Content Protection recordable Media for Video Content - TiVo - TiVoGuard Digital Output Protection Technology - Digital Transmission Licensing Administration - Digital Transmission Content Protection - RealNetworks - Helix DRM Trusted Recorder - Microsoft - Windows Media Digital Rights Management - Victor Company of Japan (JVC) - D-VHS
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Virgin Mega Wants iPod's Fairplay DRM A week after RealNetworks offered its Harmony technology to make non-iTunes
tracks playable on the iPod, we learned that a Virgin Megastore filed a
complaint against Apple in France, claiming that Apple's refusal to license the
iPod's Fairplay copy protection technology is harming competition. Virgin Mega,
a part of Richard Branson's Virgin operations, filed with the French Competition
Council in June. The store seeks several unspecified "interim
measures" while waiting for the Council to make a decision. Apple's only
comment was that it expects a decision in October or November.
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States Going After P2P Networks A number of state attorneys general have drafted a letter to send to the people who run the major P2P file-sharing networks, asking them to "take concrete and meaningful steps" to reduce the availability of pornography and do more to inform consumers of the risks of personal data security and prosecution for copyright infringement, The Washington Post reported. California AG Bill Lockyear, Florida AG Charlie Crist and Texas AG Greg Abbott co-sponsored the letter, which has not yet been sent. "This letter is full of falsehoods, exaggerations, things that have been
taken care of or are about to be completely addressed, so we think this letter
is old news," Marty Lafferty, CEO of peer-to-peer trade group the
Distributed Computing Industry Association, told The Post. "But we take our
relationship with the state AGs very seriously and we will respond to them and
try to give them a better understanding of P2P technology and where the industry
is going." Back
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Labels Clean Out Warehouses in Price Fixing Settlement As part of the settlement in the class-action CD price fixing suit against
the five major record labels the court required them to donate CDs to libraries,
schools and non-profit organizations. So, guess what? They're cleaning out their
warehouses of un-salable CDs: 48 copies of "Martha Stewart Living: Spooky
Scary Sounds for Halloween," 375 copies of "Entertainment Weekly: The
Greatest Hits 1971," 1,400 copies of Whitney Houston's CD single "The
Star-Spangled Banner" and 206 copies of "3 Mo' Tenors."
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Fierce Panda Signs Up with the Orchard The Orchard, the indie music supplier, has signed up another indie label for its digital music distribution service. Under the deal, UK-based Fierce Panda Records, home to such artists as Coldplay, Ash, Supergrass, Placebo and The Polyphonic Spree, is making its catalog available for digital sales for the first time. The Orchard distributes and markets music for its partner labels on most
major legal digital music services in the US and Europe, including EMusic,
iTunes, Napster, Musicmatch, Rhapsody and BuyMusic.
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Jupiter Slashed Digital Music Revenue Projections Jupiter Media, notorious for its hyper Internet projections a few years ago,
slashed its projected revenues for digital music (streaming and downloaded) for
2009 (TOR405) from the $3.3 billion it had predicted last year to the $1.9
billion it now forecasts. Quite a come down.
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Mazda's Music Offerings Get Phat Music lovers who are tired of switching CDs and don't want to keep their portable music player tied up in the car can now get a vehicle with its own digital music player. PhatNoise, which makes digital music players for automobiles, is working with Mazda North America in a deal that calls for Mazda's 70+ US dealerships to offer the PhatNoise Digital Media Player. The system, custom designed for the new Mazda3, Mazda6, MX-5 Miata and RX-8, integrates with each car's existing stereo and steering wheel controls and features voice feedback to help with navigating through the thousands of songs it holds. The Media Player's 20GB of storage holds the equivalent of 500 CDs that can be organized by artist, album, genre or personal playlist. The system comes with all the necessary software and a USB cradle for one-click content transfers. The PhatNoise Digital Media Player system is also available under the Kenwood
Music Keg brand at Volkswagen and Audi dealerships worldwide. General Motors
plans to offer it as a premium entertainment option in its crossover sports vans
from its Saturn, Pontiac, Chevrolet and Buick brands.
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Jones Soda Has a Jones for Indie Music Jones Soda Company, one of those trendy soft drink outfits that market organic soda, is getting into the music biz - well, sort of. The Seattle outfit has launched MyJones Independent Music, a Web site that aims to support local, regional and national independent musicians and put them in touch with their fans. The idea is to "provide a unique online community for artists and fans to share songs, links and feedback on original music." According to Jones president and CEO Peter van Stolk, his company understands the "importance of creating an emotional connection and being relevant" to its customers. "Music has always been an integral part of our consumers' lifestyle," he said. "By bringing new music to our consumers and giving the artists a chance to be recognized on our labels, we will be able to link Jones Soda directly with the independent music scene in a way that is unique and creative." The company, known for ever-changing labels featuring photos sent in by consumers, will feature different music artists on special soda bottles promoting the music site. MyJones Independent Music, at www.myjonesmusic.com, is free to access and
join. It sets up communication between musicians and music fans and lets the
artists upload their songs to the site so users can listen to them. Fans can
browse through the band listings, create playlists and vote for their favorite
song and artist. Each week the site will highlight a different band or artist
and give users easy access to the band's bio and songs.
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Internet, iPod, Other Forces Cause Radio Stations To Reduce Commercials Mike O'Connor, VP of programming for Clear Channel's Rocky Mountain area
stations, told the Denver Post that the company's decision to significantly cut
back the number of commercials on its radio stations was in response to
"audience erosion to new media." He said, "The emergence of new
media is changing the way people consume audio entertainment. They're on the
younger side. It's fair to say the train is coming down the track." The
article contends that "is not because Clear Channel has become
community-minded. It's because they're losing customers, especially younger ones
to cable and satellite television, the Internet, MP3, satellite radio,
iPod." Clear Channel owns more radio stations than any other company,
including eight in Denver. It has been criticized for the national
homogenizations of its playlists, which have become very short, and the
difficulty for new artists and music genres to gain airtime.
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Most-Played CDs on the Internet For the Week Ending August 1 This Last 1
1 Usher/Confessions
(Arista) 3 3 Black Eyed Peas/Elephunk (A&M) 4 4 Linkin Park/Meteora (Warner) 5 5 Ashlee Simpson/Autobiography (Geffen) 6 6 Avril Lavigne/Under My Skin (Arista) 7 7 Britney Spears/In the Zone (Jive/Zomba) 8 8 OutKast/The Love Below (Aquemini/Arista) 9 11 Coldplay/A Rush of Blood to the Head (Parlophone) 10 10 Beyonce/Dangerously in Love (Columbia) Aggregated from over 30 million listeners using media players powered by the Gracenote CDDB Music Recognition Service. Back to Headlines LIES, DAMN LIES AND STATISTICS
Digital Media Audio-only Adapters Face a Difficult Future In a not unsurprising prediction, market research firm the Diffusion Group says that the market for audio-only digital media adapters will grow rapidly until 2006 but then decline. Such devices like Netgear's MP101 and Apple's Airport Express stream audio, mainly music, from a PC where it is stored to a stereo or home entertainment center. According to the Dallas-based firm's "Audio Receivers: Competitive Analysis & Forecasts," sales will grow from less than 150,000 units in 2003 to almost two million by 2006. The market will be crippled by three factors, according to Diffusion Group consulting analyst Predrag Filipovic: 1. Prices and margins will decrease rapidly as volume-producers such as PC and CE companies enter the market. 2. CE makers will begin embedding in home entertainment equipment, such as TVs, stereos and DVRs, the technology needed to connect them to the home's PC network, both wired and wirelessly. 3. Single purpose audio only digital media adapters will evolve to transmit video also. Other key findings of the report include: - Almost 40% of home network owners are interested in digital audio receivers (DARs), but this interest is highly price-contingent. Such an adoption rate would depend on how consumers perceive the price/performance ratio. For example, while a list price below $70 would be highly attractive it would come at the expense of usability. - Consumer adoption of DAR functionality (as opposed to stand-alone units) is expected to approach 50% of home network users once devices become available at appropriate price points (that is, no more than 20% above similar non-connected systems) and once mainstream consumers become familiar with the concept. However, such widespread consumer awareness is unlikely before 2007. - The adoption of digital audio adapters (DAAs - devices without direct user interface) is expected to lag behind stand-digital audio receivers for the next few years. But unlike DARs, demand for digital audio adapters is not expected to decline due to the inclusion of DAR functionality in other multipurpose devices. DAA adoption should remain below 5% of networked households in the next few years (but with more than one DAA per home possible) due to usage constraints (that is, everything will be tied to the PC) and expected slow adoption of UPnP control point devices. The Diffusion Group's report "Digital Audio Receivers: Competitive
Analysis & Forecasts," includes an analysis of PC, C, and network OEMs
competing in the digital audio receiver space; an overview of consumer interest
in digital media receivers; and unit and revenue forecasts for DARs and DAAs
through 2010. It's available for purchase at www.tdgresearch.com.
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On a global basis, the telcos' DSL is far and away the dominant technology for broadband according to ABI Research's "Global Broadband & Video Subscribers Quarterly Service." The most significant broadband trend is "the continued rapid growth in new ADSL subscriptions," the report says. The study examines the global trends in subscriber growth, for delivery platforms that include DSL, cable modem, direct broadcast satellite (DBS) and wireless technologies. Several reasons account for the increase, according to the company's director of broadband research, Vamsi Sistla: - There is more interest in deploying advanced ADSL services such as ADSL2, ADSL2+ and VDSL because they: 1. Offer higher data rates 2. Increase the number of households that can subscribe 3. Enable digital TV services All of which makes DSL "increasingly competitive with cable-based broadband." Telcos in Europe and Asia - but not the US - have already rolled out advanced ADSL services offering video and TV, which are being taken up rapidly by consumers. Outside the US, broadband DSL subscriptions for the top 10 telcos total more than 34 million, as opposed to a little over 6.5 million for cable. In the US, however, cable broadband subscriptions, at over 16.5 million for the top 10 operators, still outweigh DSL by well over six million. But the gap is closing, although only gradually. "So far," says Sistla, "the cable broadband providers have done an incredible job of penetrating the US market. In contrast, the ADSL industry was always a little fragmented; the data rates were lower, especially at a great distances from the point of distribution; and it was a little unstable." The report asks, "With the improved flavors of ADSL gaining traction
even in the US market, the question is: in light of these faster technologies,
can cable maintain its complete dominance of the US market? And if so, for how
long, in the face of a rising tide of ADSL subscriptions?" Back
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New Rio Player Targets iPod mini Rio Audio, which, in a past incarnation back in the late 90s, pioneered the portable MP3 player market, now finds itself in a position to play catch-up with Apple Computer and to try to come out with a competitive player that will tear people away from their iPods. The new Rio Carbon is a 5GB device that, the company makes a point of saying, has "20% more memory than the iPod mini." It promises at least 20 hours of playback on a single battery charge. It's ultra-thin and roughly the size of a business card. Sound familiar? It even has a metallic sheen - like the iPod mini - and a touch-sensitive pad for navigation and playback control - also like the mini. Even the price is the same - $249. The Rio Carbon can hold 80 hours of MP3 or 160 hours of WMA music, supports USB 2.0 and works with both Windows and the Mac. One big difference between Rio and Apple is that the Carbon works with most online music services, while the iPod mini only directly supports iTunes, at least until that Harmony technology from RealNetworks catches on.
The Rio Carbon iPod mini-like MP3 Player Rio also introduced a new line of flash-based players - the Forge family - that's builds on its best-selling Cali line. The Rio Forge is available in 128MB, 256MB and 512MB models and was designed for the athletic type. The players are rugged and durable and boast a large, easy-to-read screen, a sports arm band and play for 20 hours on a single AAA battery. The 256MB and 512MB models feature an FM tuner and FM recording and a stopwatch.
The Sporty Rio Forge Flesh-based Player Like the Carbon, all the Forge players support USB 2.0 and work with both PCs and Macs. The Forge 128MB is $139; the 256MB $169 and the 512MB $199. All four new players should ship this month in the US and Europe.
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GoVideo Gets Back into MP3 Player Fray GoVideo, one of the first to market with a portable MP3 player back in 1999 who then disappeared from the market to focus on other product lines, is back with both flash- and hard disk-based players. The CE gear maker's Rave-MP family features the ARC hard disk players for people looking for style and storage capacity and AMP flash-based players for on-the-go folks who want a smaller, more rugged device. All the new gadgets come pre-loaded with music tracks by up-and-coming independent artists so users can start listening as soon as they leave the store. The Rave-MPs use Microsoft's Windows Media Player 9 as their default jukebox and can download music from a PC or Mac with no additional software needed.
GoVideo ABC Hard-Drive MP3 Player GoVideo says the players are made to work with Windows Media DRM and let users transfer music uploaded from CDs or downloaded from most legal online music stores - or at least the ones that offer tracks encoded in the WMA format. Additionally, all Rave-MPs include a five-band equalizer, an FM tuner and FM and voice recording functionality. The hard disk ARC player comes in a 2.5GB model that stores up to 83 hours of music and a 5GB version that can hold 166 hours. Both are powered by a rechargeable lithium ion battery that's supposed to be capable of 10 hours of continuous playback on a single charge. The flash-based AMP is available in 128MB and 256MB models that store up to four and eight hours of music respectively. They run on a single AAA battery and expand to 1GB of storage with SD or MMC memory cards. Pricing is as follows: AMP 128 - $99; AMP 256 - $129; ARC 2.5 - $199 and ARC 5.0 - $229. The AMP players will be on retail shelves in mid-August and the ARC ones will
be out in early September. Back
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Gizmondo Buys Game Maker Indie Studios Gizmondo Europe, a subsidiary of Jacksonville, Florida-based mobile GPS system designer Tiger Telematics, has acquired Indie Studios, a Stockholm games developer. The deal is meant to broaden the Gizmondo brand and provide the company with current and future game content and a "captive long-term creative resource." Tiger set up the Gizmondo unit to develop and market the upcoming Gizmondo, a handheld gizmo that provides mobile gaming, multimedia messaging, an MP3 player, an MPEG-4 movie player, a digital camera, a GPRS network link for wide-area network gaming and Bluetooth functionality for close-range multi-player gaming. Powered by Windows CE.NET, the Gizmondo has a big 2.8-inch color screen, a Samsung ARM9 400MG processor and a 64-bit graphics accelerator. The company expects to launch the thing in the UK in Q4 and in North America in 1Q05. Indie Studios is already developing two Gizmondo-specific games that should be ready in time for the device's launch. Leveraging Gizmondo's GPS capabilities and messaging over GPRS, several Indie Studios games will incorporate a player's physical location into the game itself, creating a unique virtual gaming world. According to Gizmondo managing director Carl Freer, "with our resources and financial muscle, we are able to provide Indie Studios with essential support and direction. And by owning our own games developer, we gain control over unique content and its evolution." Tiger paid a million shares of its stock, worth some $8 million when the deal
was cut. It agreed to issue additional shares if Indie Studios completes
"certain games" in a specified time frame. Back
to Headlines
iRiver Intros Handheld Video Players iRiver, which makes both hard drive- and flash-based MP3 players, has unveiled a new line of handheld digital media gadgets that go way beyond just playing music. The iRiver PMP-100 (Portable Media Player) series moves into turf inhabited by only a few rarified companies, such as Archos and HandHeld Entertainment, by showing the user's favorite video content on its 3.5-inch full-color screen. The PMP-100s let users listen to music as well as watch recorded TV shows, movies and home videos and look at digital pictures. The players support various video, audio and picture formats including AVI, MPEG4, MP3, WMA, WAV, ASF and JPEG. There's supposed to be what the company calls "an intuitive video conversion application" that somehow guarantees video compatibility. Oh, and they also have the features common to most iRiver music players, including an FM tuner, integrated voice recorder and the ability to encode and store MP3 files from various sources. Compatible with both PCs and Macs, the PMP-100 is available with either a 20GB or 40GB hard drive, and can download content directly from supported digital cameras and storage devices. The 20GB model, the 120, retails for about $500. The 40GB 140 can store 150 hours of video or 1,200 hours of music. Both come with a rechargeable, replaceable lithium-ion battery that provides up to 12 hours of continuous audio play or four hours of video on a single charge. HandHeld's ZVUE video player with its 2.5-inch color display is $150 and also plays MP3 files, video clips and JPEG images. It supposedly runs for up to eight hours on four AA batteries. The Archos gizmos not only play video, but record it as well. Its newest
devices, the AV400 line, records content directly from PCs, TVs, set-top boxes
and VCRs. It also lets users watch videos, view pictures, listen to music and
record it. A 20GB model goes for $550 and the 80GB for $800. Back
to Headlines
AOL Revenues Rise Despite Dial-up Decline During the second quarter AOL continued losing dial-up subscribers, as
expected, but reported higher revenues and profits because of increased
advertising and an emphasis on its bundles of broadband products and services.
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Increased Spoof Files on P2P Networks BayTSP, the cyber sleuth firm, reports that in June interdiction companies
increased pressure on the FastTrack network that Kazaa and others use by
flooding it with more spoofed files. The average number of files per user
increased from 204 on May 10th to 371 on May 31st, jumping to an average of 385
for the month of June and peaking 541 per user on June 30.Back
to Headlines
5.1 Live Surround Sound Coming to the Net Digital Theater Systems (DTS) demonstrated streaming high-definition
surround-sound audio over the Internet in a recent trial with Swedish Radio.
Audio mixed live in 5.1-channel surround sound from an outside broadcast was
encoded at 24 bit, 96KHz using DTS' Coherent Acoustics codec, and streamed onto
the Sprint Network via Internet protocol, at 1.5 Mbps - equivalent to full DVD-V
and DVB bit rate. The event marked the first time that DTS Digital Surround has
been streamed over an IP network, and proves that high bit rate, high-quality
surround sound audio can now be streamed using DTS, providing a common delivery
format for DVD, DVB and digital cinema. Back
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BigChampagne, which tracks Internet file sharing trends, reports that 19%
more people were using peer-to-peer services such as Kazaa and eDonkey in June
2004 than in June 2003. Back
to Headlines
AOL Closes Online Movie Ticketing AOL transferred its Moviefone online movie ticketing business to
MovieTickets.com. Last year, only 4.3%, or $400 million, of movie-ticket sales
occurred online, according to JupiterResearch. Steven Yee, general manager of
AOL Movies and Moviefone.com said that the company wanted to focus on its core
businesses. MovieTickets is a privately held company whose investors include
Viacom, AMC Entertainment and Hollywood Media Corporation with AOL as a minority
investor. Back
to Headlines
Microsoft's new Janus DRM (TOR395) is expected to start showing up on online
subscription music services and portable music players. Among other things, it
will permit users of Janus-based subscription services to copy tracks to their
Janus-based music players where they can be played as long as the user pays his
monthly fee. Whenever the user plugs the player into the PC for synchronizing,
the player will verify whether or not the fee payment has been made. If not, the
tracks will no longer be playable. Janus can also be used to protect content
that is streamed around a home's PC network and block data paths such as the
analog outputs on an HDTV set to prevent digital movies from being recorded on a
DVD recorder. The studios' TV production houses want such protections for their
digital content. Back
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"Unfortunately, DRM and open-source software are today largely
incompatible because of an extension to copyright law called the Digital
Millennium Copyright Act." - Martin Fink, HP's VP for Linux. Back
to Headlines
CE Industry Bows to Microsoft, Intel How suddenly has digital media technology changed things in the consumer
electronics industry? It's no longer the heads of Sony, Matsushita (Panasonic)
and the like that are looked to for leadership. CES, the world's largest
consumer electronics show, will have the kingpins of Intel and Microsoft give
the most prestigious presentations. Bill Gates, chairman and chief software
architect of Microsoft will deliver the pre-show keynote address on Wednesday,
January 5. Intel CEO Craig Barrett will deliver the opening keynote address on
Thursday, January 6. Gary Shapiro, president and CEO of show host CEA, said,
"Microsoft and Intel continue to be international leaders, debuting the
latest and greatest technologies for the consumer marketplace each year at CES.
We're thrilled to have Mr Gates and Dr Barrett back at CES to show our attendees
the new technologies that will make it even simpler for consumers to stay
connected, entertained and informed 24/7." He made no mention of the
traditional CE or media companies. CES 2005 is in Vegas on January 6-9. More
than 2,400 exhibitors will show off their wares. Back
to Headlines
Macrovision Boots Revenues, Profits Macrovision reported a 22% rise in revenue for Q2, which boosted profits to
$8.8 million from the year-ago quarter's $4.6 million. Revenue rose to $35.7
million from $29.2 million a year ago. The company cited "continued strong
performance in our DVD and pay-per-view copy protection business and our
enterprise software value management business." Back
to Headlines
Microsoft Music Service Coming Soon Rumblings out of Redmond are that Microsoft will launch its MSN online music
service by month-end, barring additional delays. It is expected to go
head-to-head with iTunes by offering a download service immediately and take on
Rhapsody and Musicmatch with a Janus-based subscription service that'll come
later. Back
to Headlines
200 Mbps Broadband in the Labs Dave Burstein's DSL Prime reports that in the labs VDSL, the faster DSL, is
running at over 200 Mbps on a pair of copper wires. With four pairs, VDSL
reaches 1 Gbps. Back
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The Buggy Whip Business of the Internet "Narrowband is like the buggy whip business." - David Cole of Microsoft in the New York Times on why the company's MSN service is focusing on advertising rather than its dial-up Internet access business. . -------------------------------------------------------------THE
online
REPORTER
is
published weekly by Rider
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quantity discounts to groups, departments and companies. (c) Copyright 2005 Rider Research, Inc. No portion of this publication may be reproduced, stored in a retrieval system, posted on an Internet/Intranet site, or transmitted in any form or by any means, electronic, mechanical, photocopying, recording, forwarded by e-mail or otherwise without prior written permission of Rider Research, Inc. Comments? Group rates? e-mail: paperboy@riderresearch.com ----------------------------------------------------------------THE
online
REPORTER
provides weekly reports and strategic analysis about
digital consumer technology and the e-commerce activities of
the movie and music companies.. It reports on all the power
struggles that have been unleashed.
If ever that overused phrase "paradigm shift" was apt, it's now, about the Digital Media industry. There's not a company in the industry that's not worried about where it'll still be standing after the deluge - and that goes for leaders like AOL Time Warner as well as that feared monolith Microsoft. Its format is concise and pointed, its style a touch brash and, with any luck, a bit controversial. Its object is to break the stories that give its readers the real inside track. It is pledged to fact and fair comment. THE online REPORTER - Intelligence for decision makers.
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: Simon
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